Sly Stone Court Ruling

7/28/2019 Sly Stone Court Ruling

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Filed 5/30/13 Stewart v. First Cal. Bank CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits cou rts and parties from cit ing or relying on opinions not certified forpubli cation or ordered publi shed, except as specified by rule 8.1115(b). This opinion has not been certified for pub licationor ordered publi shed for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

SYLVESTER STEWART et al.,

Plaintiffs and Appellants,

v.

FIRST CALIFORNIA BANK et al.,

Defendants and Respondents.

B236286

(Los Angeles County

Super. Ct. No. BC430809)

APPEAL from a judgment of the Superior Court of Los Angeles County, Mark V.

Mooney, Judge. Affirmed in part, reversed in part with directions.

Allan Law Group, Robert J. Allan, Edythe E. Huang; Scheper Kim & Harris,

David C. Scheper, William H. Forman and Julio V. Vergara for Plaintiffs and Appellants.

Davis Wright Tremaine, Mary H. Haas, Carla A. Veltman and Law Offices of

Richard A. Shaffer and Richard A. Shaffer for Defendant and Respondent First California

Bank.

Mitchell Silberberg & Knupp, Marc E. Mayer, Andrew C. Spitser for Defendants

and Respondents Warner/Chappell Music, Inc. and Warner-Tamerlane Publishing Corp.

Law Offices of Peter J. Anderson, Peter J. Anderson for Defendant and

Respondent Sony Music Entertainment.

Ballard Spahr Andrews & Ingersoll, Penny Marie Costa, Corey Field and Rosina

Maria Hernandez for Defendant and Respondent Broadcast Music, Inc.


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I. INTRODUCTION

Plaintiffs/appellants Sylvester Stewart (Stewart) and Ken Roberts (Roberts)

brought suit against a large number of individuals and entities, including those involvedin this appeal, defendants/respondents Sony Music Entertainment (Sony),

Warner/Chappell Music, Inc. and Warner-Tamerlane Publishing Corp. (Warner),

Broadcast Music, Inc. (BMI), and First California Bank (Bank). Through multiple

causes of action, plaintiffs seek recovery of past and future royalty payments for musical

works authored and produced by plaintiff Stewart, who rose to prominence in popular

music as Sly Stone in the late 1960s and early 1970s. Stewart was also the lead

performer of the works, as front man for the band known as Sly and the Family

Stone. Roberts was Stewarts friend and one-time manager, and an assignee of some of

Stewarts royalty rights.

The court below sustained these defendants demurrers without leave to amend.

We will affirm, except as to plaintiff Roberts breach of contract and declaratory relief

causes of action against defendant BMI. Roberts conversion claim against BMI was

properly dismissed. Plaintiff Stewarts several causes of action against Sony, Warner,

and BMI were also properly dismissed by the trial court.

Following oral argument before this Court, both plaintiffs dismissed their appeals

as to defendant Bank.

II. PROCEDURAL HISTORY

In a series of complaints filed between January 28, 2009 and May 10, 2011,

plaintiffs Stewart and Roberts made claims against nearly three dozen individuals and

entities. The Fourth Amended Complaint (4AC) consists of 88 pages, supplemented by

142 pages of attachments. It includes 35 causes of action, 13 of which name one of the

three defendants involved in this appeal. They are as follows:


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Stewart v. Sony (23d for Breach of contract, 24th for Conversion, 25th for

Negligence, 26th

for Accounting, 27th

for Declaratory relief);

Stewart v. Warner (28th for Conversion, 29th for Accounting, 30th for Declaratory

relief);Stewart v. BMI (31st for Breach of contract, 32ndfor Accounting); and

Roberts v. BMI (33d for Conversion, 34th

for Breach of written agreement, 35th

for Declaratory relief).

In June of 2011, these defendants demurrers to all of the above-listed causes of

action were sustained without leave to amend. Plaintiffs filed these timely appeals.

III. FACTUAL SUMMARY

We summarize the pertinent facts alleged in the Fourth Amended Complaint and

exhibits thereto, with occasional references to earlier versions of the complaint. (Berg &

Berg Enterprises, LLC v. Boyle (2010) 178 Cal.App.4th 1020, 1034 [the court may

consider the factual allegations of prior complaints, which a plaintiff may not

[contradict]. . . in an amended pleading]; Performance Plastering v. Richmond

American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 665 [We also consider

matters shown in exhibits attached to the complaint and incorporated by reference.]

[Citation.])

A. Overview Of The Complaint

The Fourth Amended Complaint begins with a summary stating the action arises

from the misappropriation of tens of millions of dollars by defendant Gerald Jerry

Goldstein (Goldstein) and his business partners (collectively, the Goldstein Group) in


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concert with, among others, defendants Sony, Warner and BMI, who are referred to

collectively as the royalty distribution companies.1

In the 1960s, Stewart signed recording contracts with Sony, and agreements with

Warner and BMI to exploit the compositions and recordings. Roberts became Stewartsmanager in the early 1970s. In 1975, Stewart assigned his BMI royalty rights to

Roberts. In 1989, defendants Goldstein, Glenn Stone (attorney Stone) and Stephen

Topley (Topley) induced Stewart to sign an Employment Agreement and a

Shareholders Agreement. The latter created an entity called Stone Fire Productions,

later known as Even St. Productions Ltd. (Even Street). Based on what he was told,

Stewart thought he was simply agreeing to hire Goldstein, attorney Stone and Topley,

working through Even Street and an entity called TAG Management, Inc. (TAG), as

his personal and business managers. The written agreements, however, did not comport

with the terms discussed between the parties. For over two decades thereafter, the

Goldstein Group used the fraudulently obtained Employment Agreement to divert,

convert and misappropriate Stewarts royalties. Goldstein convinced Stewart that his

royalties were minimal due to tax liens and levies, and that, in light of his tax problems,

Stewart could not have assets in his name or receive royalties directly. Several entities

(Goldstein Music Companies) were empowered to collect Stewarts royalties.

Beginning in 1997 the Goldstein Group and the entities they controlled borrowed

millions of dollars from former defendant Bank, secured by Stewarts future royalties.

Under the Employment Agreement, the loan proceeds did not belong to Stewart. In 2008

Goldstein told Stewart he would receive no further advances of funds from the Goldstein

Music Companies, leaving Stewart virtually destitute and dependent on friends for

housing and support.

The royalty distribution companies disregarded signed contracts and

assignments between Stewart and Roberts, allowing royalties to be diverted to

1The introductory section of the Fourth Amended Complaint makes no mention of

defendant Bank. Nor does it mention a highly significant document, the 1989Assignment.


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improper entities. The royalty companies acted without due diligence and in some

instances . . . with knowledge that [Stewart] was not aware of agreements between Even

Street and the royalty companies.

The introduction to the Fourth Amended Complaint concludes by stating plaintiffsare seeking past and future royalties and declaratory relief.

B. Detailed Summary of Plaintiffs Factual Allegations

1. Stewart, aka Sly Stone

Stewart, a musician since childhood, became a prolific composer of over 300

registered songs. He and his band, Sly and the Family Stone, developed an international

reputation based on several top 40 hit songs written by Stewart, and performances

including an appearance at the Woodstock, New York concert in 1969. The band, a

racially diverse group of men and women, was considered socially progressive. Their

performances of Stewarts music were influenced by multiple genres. The band was

inducted into the Rock and Roll Hall of Fame in 1993, and Stewart was honored as an

influential musician byRolling Stone magazine. Stewarts songs continue to be played by

other performers and on the radio and elsewhere, and have been used in several movies in

recent years.

Stewart had no business or money management experience; as a result, he has

always been dependent on managers and other advisors for handling of his personal and

professional financial affairs. Stewart engaged in substance abuse during his performing

years, resulting in a lifelong addiction to cocaine and sedatives. This allegedly made him

particularly susceptible to the duress and undue influence of Goldstein, Topley and

attorney Stone.


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2. Roberts

Roberts became Stewarts personal and professional manager in the early

1970s. Between 1975 and 1982, he advanced money to Stewart and paid some ofStewarts debts to third parties. To repay Roberts, in January of 1976 Stewart executed

an irrevocable assignment (1976 Assignment) of his BMI royalties to Roberts and/or

Ken Roberts, Inc., an entity wholly owned and controlled by Roberts.

3. Stewart, Roberts, BMI and the Internal Revenue Service

Defendant BMI is a not-for-profit performing rights organization. It distributes all

of its income, after deducting operating expenses and reasonable reserves, to its affiliated

music publishers and songwriters. Through affiliation agreements with copyright

owners, BMI acquires non-exclusive public performance rights. BMI, in turn, enters into

license agreements which grant to music users, such as broadcasters and the operators of

concert halls, the right to publicly perform any of the works in BMIs repertoire.

In 1964, plaintiff Stewart entered into an affiliation agreement with BMI that was

amended and extended numerous times until March of 1979, when Stewart entered into a

new agreement with BMI (the 1979 BMI Affiliation Agreement), in which Stewart

granted BMI the right to collect royalties on his behalf in exchange for BMI paying

royalties and providing royalty statements to the party entitled to receive them. Under

the terms of the 1979 BMI Affiliation Agreement, Stewart was obligated to notify BMI

promptly of any change of his address.

Beginning in 1976, BMI paid Stewarts royalties to his then-manager, plaintiff

Roberts, pursuant to the aforementioned 1976 Assignment. In April of 1979, Stewart,

Roberts and BMI modified the 1976 Assignment of the BMI royalties in a writing

signed by all three parties (the 1979 BMI Modification). That document identified

Majoken Inc., a corporation formed by Roberts in New York in 1975, as successor in

interest to Ken Roberts Enterprises. BMI was directed to begin paying Stewarts


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royalties, approximately $30,000 a year at that time, to Majoken, Inc. (Roberts-

Majoken). BMI followed this directive (the 1979 BMI Amendment) until the IRS

levied a multi-million dollar tax lien upon Stewarts BMI royalties in 1980. Until the lien

was lifted in 1996, BMI paid the royalties directly to the IRS.Stewart and Roberts were unaware that negotiations between an attorney hired by

the Goldstein Group and the IRS resulted in the lifting of the lien in July of 1996. At

about that time, a new entity called Majoken, Inc. (Goldstein-Majoken), was formed

by Goldstein, Topley and attorney Stone without the knowledge or consent of Stewart or

Roberts. In an August 1996 letter, attorney Stone instructed BMI to begin sending the

BMI royalty checks to Majoken, Inc. at the Los Angeles address of Even Street. BMI

began doing so shortly before the letter was sent, and did so until 2009, when BMI was

informed by Stewarts attorney about the existence of two companies named Majoken,

Inc. Pursuant to attorney Stones instructions, BMI had been sending royalty statements

to attorney Stone since 1989.2 Between 1996 and 19993 BMI paid approximately

$600,000 in royalties to Goldstein-Majoken.

Unbeknownst to BMI, Roberts-Majoken was dissolved by the State of New York

in 1991 and remained defunct until its reinstatement in 2009, shortly before Stewart and

Roberts filed the instant lawsuit. For more than 30 years, from 1979 through 2009, the

BMI royalties were made payable to either the IRS or Majoken, Inc. During this

period neither Stewart nor Roberts nor anyone on their behalf ever complained to BMI

that they were not receiving royalty payments or statements. No one ever advised BMI to

cease sending royalty payments and statements to Majoken, Inc. In 2009, BMI provided

2

In the 1989 Assignment, discussed below, Stewart assigned his BMI royalty rightsto Even Street, without purporting to revoke the 1976 assignment to Roberts.

3 1999 may be a typographical error in the Fourth Amended Complaint, since theroyalty payments discussed here continued until 2009. In any event, plaintiffs allegedbased on the facts summarized in the text accompanying this footnote, that BMI knew orshould have known through the exercise of reasonable diligence of the fraudulent activityof the Goldstein Collaborators.


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Stewarts attorney with copies of all of Stewarts royalty statements, along with other

documents counsel had requested.

4. Stewart and Sony

Under three 1967 and 1972 recording contracts, Stewart rendered services as a

recording artist to Epic Records, a division of CBS Records, Sonys predecessor

(CBS/Sony). The first contract, dated June 6, 1967 when Stewart was 22 years old,

assigned to CBS/Sony all rights in eight Sly and The Family Stone master recordings

made the previous month. The second contract, dated June 7, 1967, provided that

Stewart and Sly and the Family Stone would render recording services to CBS/Sony for

up to five years, or until 1972. The third contract, dated September 15, 1972, extended

those recording services for up to another four-and-a-half years or until ten master

recordings had been delivered. Under the recording contracts, CBS/Sony received

certain rights to the master recordings and agreed to pay Stewart royalties. In 1977,

Stewart and Sony released each other from all obligations except Sonys continuing

obligation to pay royalties to Stewart and Stewarts right to audit Sonys accountings.

From 1989 until 2009, Sony paid royalties under the 1967 and 1972 Sony

recording contracts to Even Street, pursuant to the 1989 Assignment by Stewart to Even

Street, which is discussed further below. Sony was not given notice of the 1989

Employment Agreement, also discussed further below. Stewart did not contact Sony

directly before 2009, and Sony took no steps to determine the validity of the 1989

Assignment.

In 2002, Stewarts managers, Goldstein, Topley and Stone, negotiated an

agreement between Sony and Even Street (the 2002 Sony Agreement), which provided

for new advances and royalty rates for Sonys exploitation of the master recordings

created under the 1967 and 1972 recording contracts. This agreement included the right

to market re-releases, re-mixes, a compact disc box set of Sly and The Family Stone

albums and to create a web-site. Even Street retained certain veto powers as to the


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content of new products. The 2002 Agreement also settled an audit claim. A draft of the

2002 Sony Agreement included Stewarts signature line, but in the final version the

signature line was replaced with Even Streets warranty of both its authority and

Stewarts knowledge of the 2002 Sony Agreements terms. Sony did not furtherinvestigate the issue of Stewarts awareness or consent to the new agreement. However,

Sony asked for and received from the Goldstein Group a draft press release for use in the

event Stewart contested the authority of the Goldstein Group enter into the 2002 Sony

Agreement.

5. Stewart and Warner

In 1985, Stewart sold his publishing interest in most of his existing musical

compositions (the Stone compositions) to Michael Jacksons MiJac Music, retaining

only the right to 100% of the songwriters share of the royalties. Thereafter, the

Warner defendants, who are publishers specializing in administration of the written

words and notes of musical compositions, administered and exploited the Stone

compositions pursuant to its contract with MiJac. Warners duties included collecting

and paying out the songwriters royalties.

Between 1985 and 1989, Warner paid Stewarts royalties to the IRS pursuant to a

tax lien. After the lien was lifted in 1989 and Warner received notice of the 1989

Assignment, Warner distributed royalties to Stone Fire Productions, Inc. and its

successors and assignees (including Even Street and former defendant Bank) in reliance

on the 1989 Assignment. For the following 20 years, neither Stewart nor anyone else

objected to Warners actions regarding the royalties.

As noted below, Bank made a series of loans to Even Street and its subsidiary,

Goldstein-Majoken, which were secured in part by the Warner royalties. From 1999 to

2008 the Warner royalties were assigned to Bank by Goldstein and Even Street. Bank

applied the Warner royalties it collected to the loan balance and related fees.


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6. Stewart and the Goldstein Group

Stewart first met Goldstein in the 1960s and by 1989 they had known each other

for over 20 years. Goldstein had extensive experience as the producer of hit songs and infinancial management in the music business. Stewart first met Topley in the late 1960s

when Topley worked for Epic Records and was assigned to promote Sly and the Family

Stone. Attorney Stone was introduced to Stewart by Goldstein in late 1988 or early

1989; Goldstein told Stewart attorney Stone was legal counsel for Goldsteins music

companies.

By early 1989, Stewarts addiction to cocaine and sedatives had resulted in legal

trouble, including the aforementioned tax liens and levies. He was a fugitiveand he had

no record deal or other substantial income. Between December of 1988 and February of

1989 Goldstein, through his company Goldstein Music, made approximately 30 loans to

Stewart in amounts ranging from one hundred to several hundred dollars. The money

was used to pay Stewarts living expenses and to fuel his drug addictions. Goldstein and

attorney Stone gave cocaine to Stewart on several occasions. In late February of 1989,

Goldstein, Topley and attorney Stone told Stewart that Goldstein had obtained a new

recording contract for Stewart. They told Stewart there would be no more loans or drugs,

and no recording contract, unless Stewart signed an agreement providing that their entity,

Even Street, would become manager of all of Stewarts personal and professional

financial affairs. They promised to help Stewart and advised that because of the tax

problems, Stewart should not have any assets in his name or receive royalties directly.

Trusting Goldstein, Topley and attorney Stone, Stewart agreed. Three documents,

which Stewart had no role in preparing, were executed in February 1989 to confirm the

arrangement. Stewart was told and believed the documents established a standard

professional and business management arrangement whereby Goldstein, Topley and

attorney Stone would provide services in return for standard fees based on a percentage

of the income earned. Instead, unbeknownst to Stewart, the documents provided that

Stewart would become the employee of Even Street.


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The first document was the Shareholders Agreement, which provided Even

Street (then known as Stone Fire Productions Ltd.) would be owned equally by Stewart

and defendant TAG Management, Inc. (TAG), a Goldstein company. The

Shareholders Agreement also states Even Street would employ Stewart.The second February 1989 document was the Employment Agreement, whereby

Even Street obtained Stewarts services in the music industry, agreed to use best efforts

to advance his career and agreed to pay him 50% of Even Streets net profits. The

Employment Agreement provided for a five-year term and allowed Stewart to terminate

his employment if he did not receive minimum payments ranging from $75,000 to

$250,000 a year. The Employment Agreement included, unbeknownst to Stewart, his

express appointment of Even Street, and his managers, Topley and Goldstein, as his

attorneys-in-fact. Their authority included signing music related contracts on Stewarts

behalf. After the 1989 Employment Agreements stated five-year term expired, Stewart

continued to allow the Goldstein Group to manage his financial and personal affairs

through 2009. Stewart never received a copy of the Employment Agreement before 2009.

The third February 1989 document, which Stewart initialed and signed, is a

notarized assignment (the 1989 Assignment) to Stone Fire Productions Ltd., later

renamed Even Street, of all rights and benefits resulting from the prior exploitation of

Stewarts skills, talents and services in the entertainment industry, including but not

limited to, as a musician, composer, arranger, publisher, recording artist, actor, writer and

performing artist. The 1989 Assignment expressly includes all royalties due or to

become due from CBS/Sony, BMI and Warner. The 1989 Assignment also includes,

without limitation, the full right to settle or compromise claims on the assigned rights.

The document makes no mention of Roberts, or of the 1976 irrevocable Assignment to

Roberts of Stewarts BMI royalties.

Once the Goldstein Group became his managers in 1989, Stewart relied on them to

deal with defendants Sony, BMI and Warner regarding royalty distribution. Stewart

often asked Goldstein about royalties. Goldstein told him the amounts received did not

exceed those Even Street had paid to Stewart or on his behalf. Stewarts repeated


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requests that his managers show him reports or documents concerning royalties, as well

as the books and records of Even Street, were ignored.

7. The Goldstein Group, First California Bank and the royalty rights

Between 1997 and 2009, former defendant Bank made approximately 24 loans to

Even Street, Goldstein-Majoken and other Goldstein entities, totaling at least $5 million.

The loans were secured in part by Stewarts music royalties.

Eventually, Goldstein executed assignments of Goldstein-Majokens right to

receive the BMI and Warner royalties, allowing Bank to collect the royalties directly.

From 1999 to 2008, Bank received BMI royalties by direct assignment from Goldstein

and Goldstein-Majoken. Bank applied these monies to the balance owed and fees due for

the Goldstein and Goldstein-Majoken loans. From 1996 through 2009, BMI paid to

Goldstein-Majoken and Bank a total of $3,292,675.82).

8. Events shortly before the filing of this action

In 2008 Goldstein had stopped giving Stewart advances, leaving him destitute.

With the help of friends, in 2009 Stewart obtained a copy of his 1989 Employment

Agreement with Even Street, allegedly realizing for the first time that it provided he was

a mere employee.4

In 2009, after Stewart provided his Employment Agreement to Sony, BMI and

Warner, royalty distributions were suspended. Eventually, the accruing royalty funds

were interpleaded in this lawsuit.

On January 7, 2010, days before plaintiffs filed their initial complaint in this

action, Roberts provided BMI with a declaration in which he stated that he and Majoken,

4As defendants point out, Stewart nowhere alleges he misunderstood the 1989

Assignment.


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Inc. are owed nothing under the assignments from Stewart. After first noting that the

1976 Assignment had been given to him and Ken Roberts Enterprises, Inc. as security for

loans they had made to Stewart, Roberts declared under penalty of perjury, At this time,

no monies are due and payable by Sly Stone to me or Majoken, Inc.On January 28, 2010, plaintiffs filed their initial complaint against 23 individuals

and entities.5

IV. STANDARD OF REVIEW

We independently review the record to determine if the trial court erred in

sustaining a demurrer. (Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110,

1115.) In conducting a de novo review, we independently review the pleading to

determine whether the facts alleged state a cause of action under any possible legal

theory. (Citations.) (Long v. Century Indemnity Co. (2008) 163 Cal.App.4th 1460,

1467.) The appealing [p]laintiff bears the burden of proving the trial court erred in

sustaining the demurrer or abused its discretion in denying leave to amend. (McKell v.

Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1469 (McKell).)

Our only task . . . is to determine whether the complaint states a cause of action.

Accordingly we assume that the complaints properly pleaded material allegations are

true and give the complaint a reasonable interpretation by reading it as a whole and all its

parts in their context. [Citations.] We do not, however, assume the truth of contentions,

deductions, or conclusions of fact or law. [Citation.] (People ex rel. Lungren v.

Superior Court(1996)14 Cal.4th 294, 300-301.) Nor do we accept as true allegations

5 In addition to the three defendants involved in this appeal and former defendantBank, plaintiffs sued Gerald Goldstein, Claire Levine, Jaclyn Levine, Stephen Topley,Glenn Stone, Elva Hackney, Columbia Street, Inc., T.A.G. Management, Inc., Even St.Productions Ltd., Majoken Inc., TMC Music, Inc., Far Out Productions, Jerry GoldsteinMusic, Inc., Audio Visual Entertainment, Inc., Amadeus Capital Investors, LLC,Amadeus B, LLC, Gerald Goldstein Revocable Trust, and the Amadeus Trust.


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that are contradicted by exhibits to the complaint. In that circumstance, we accept as true

the contents of the exhibits unless they are ambiguous. (SC Manufactured Homes, Inc. v.

Liebert(2008) 162 Cal.App.4th 68, 83;Banis Restaurant Design,Inc. v. Serrano (2005)

134 Cal.App.4th 1035, 1044-45.) We may not assume the [plaintiff] can prove facts that[he or she] has not alleged. (Associated General Contractors of California, Inc.v.

California State Council of Carpenters (1983) 459 U.S. 519, 526, [103 S. Ct. 897, 74 L.

Ed. 2d 723.])

Like the court below, we may take judicial notice of certain facts, including . . . a

partys earlier pleadings and positions as well as established facts from both the same

case and other cases. [Citations.] The complaint should be read as containing the

judicially noticeable facts, even when the pleading contains an express allegation to the

contrary. [Citation.] A plaintiff may not avoid a demurrer by pleading facts or

positions in an amended complaint that contradict the facts pleaded in the original

complaint or by suppressing facts which prove the pleaded facts false. (McKell, supra,

142 Cal.App.4th at p. 1491.)

When a pleading reveals that [plaintiff] lacks either the right or standing to sue, it

is vulnerable to a general demurrer on the ground that it fails to state a cause of action.

(Carsten v. PsychologyExamining Comm. (1980) 27 Cal.3d 793, 796.) Similarly, a

demurrer must be sustained where the face of the complaint demonstrates clearly and

affirmatively that the right of action is barred by the statute of limitations. (Lockley v.

Law Office of Cantrell, Green, Pekich, Cruz & McCort(2001) 91 Cal.App.4th 875, 881.)

Applying these standards, we liberally construe [the pleading] with a view to

substantial justice between the parties. (Code Civ. Proc., 452; Kotlar v. Hartford Fire

Insurance Co. (2000) 83 Cal.App.4th 1116, 1120.) We will affirm the judgment if it is

correct on any ground stated in the demurrer, regardless of the trial courts stated

reasons. (Fremont Indemnity Co. v. Fremont GeneralCorp. (2007) 148 Cal.App.4th 97,

111.)

While leave to amend is liberally granted, . . . [i]t should not be granted where . .

. amendment would be futile. (Vaillette v. Firemans Fund Insurance Co. (1993) 18


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Cal.App.4th 680, 685;Long v. CenturyIndemnity Co., supra, 163 Cal.App.4th at

p.1467.) [W]e decide whether there is a reasonable possibility that the defect can be

cured by amendment: if it can be, the trial court has abused its discretion and we reverse;

if not, there has been no abuse of discretion and we affirm. [Citations.] The burden ofproving such reasonable possibility is squarely on the plaintiff. [Citation.] (Blank v.

Kirwan (1985) 39 Cal.3d 311, 318.)

V. DISCUSSION

A. Stewarts Separate Claims

1. Stewart concedes he lacks standing to sue BMI

Stewart sued BMI for breach of contract and accounting. The claims are grounded

on the allegation that BMI wrongfully failed to furnish Stewart with royalty statements at

least twice a year, beginning in 1989.

There is no dispute that Stewart assigned his BMI royalty payments to plaintiff

Roberts and/or his designee in 1976. Stewart assigned them to Even Street in 1989.

These assignments included the right to receive [a]ll monies payable pursuant to

[Stewarts Affiliation Agreement with BMI] and any extensions or modifications

thereof. Presumably, the right to receive statements was assigned along with the right to

royalty payments.

By assigning his BMI royalty rights, Stewart relinquished his standing to bring

suit. Once rights are assigned, the assignee stands in the shoes of the assignor, and the

assignor lacks standing to sue on the claim. (See Civ. Code 1458;Johnson v. County

of Fresno (2003) 111 Cal.App.4th 1087, 1096 (Johnson).)

Apparently conceding this issue, Stewart does not challenge the trial courts ruling

as to his causes of action against BMI.


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2. Stewart lacks standing to sue Sony

Stewart sued Sony for breach of contract, conversion, negligence, accounting and

declaratory relief. The claims are grounded on the allegations that Stewart still ownsroyalty or other rights in the master recordings under the 1967 and 1972 recording

contracts, that Sony wrongfully paid Stewarts royalties to Even Street and Goldstein-

Majoken, and that the 2002 Sony Agreement was invalid.

The trial court, while questioning whether royalty payments can be the subject of a

conversion, ruled that the facially valid 1989 Assignment was properly relied on by Sony,

which, for over two decades, had no notice of any contention the Assignment was

invalid, or that Stewart objected to the way the royalties were being paid. We agree with

the trial courts conclusion.

The 1989 Assignment included the Sony royalties, and the fourth amended

complaint specifically alleges that Sony received the1989 Assignment and complied with

it in distributing the royalties to Even Street and Goldstein-Majoken. The 1989

Assignment reads:

ASSIGNMENT [] For One ($1.00) Dollar, and other good and valuable

consideration, receipt of which is hereby acknowledged SYLVESTER STEWART p/k/a

Sly Stone (Assignor) hereby assigns, transfers, sets over and conveys to STONE FIRE

PRODUCTIONS LTD. (Assignee), all rights, title and interest in and to any and all

claims, rights, causes of action and benefits now known or unknown resulting from the

prior exploitation of the Assignor s skills talents and services, in the entertainment

industry including but not limited to, as a musician, composer, arranger, publisher,

recording artist, actor, writer and performing artist. Said assignment shall include but not

be limited to the following: [] 1. Any royalty or other income now due past due or to

become due from CBS RECORDS. [] 2. Any royalty or other income now due, past

due, or to become due from WARNER/CHAPPELL MUSIC, INC. including but not

limited to publishing royalties and income, and writers royalties and income. [] 3.

Any royalty or other income now due, past due, or to become due from BMI, INC.


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including but not limited to publishers peformance [sic] royalties or income, and writers

performance royalties and income. [] The within named assignment, transfer and

conveyance includes without limitation any and all rights that Assignor now has or to

which Assignor may become entitled under existing or subsequently enacted federal,state or foreign laws. The within grant further includes all proceeds from the foregoing

accrued and unpaid and hereafter accruing and all such claims, rights, causes of action

benefits arising therefrom without limitation with full right to maintain any actions

thereon, and to settle, compromise, or reassign such claims, and to get a release in

Assignors name in full discharge of the liability thereunder.

Stewart would have us reject the plain meaning of the 1989 Assignment based on

bare allegations of ambiguity. We decline to do so here, as did Division Eight of our

court in George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112

(George). In George the court applied the usual rules of contract interpretation in the

context of a demurrer involving an insurance policy. (Id. at p. 1120.) The court rejected

the argument that a mere allegation of ambiguity, even if supported by allegations of

unidentified extrinsic evidence, requires a demurrer to be overruled. (Id. at pp. 1127-

28.) Instead, in ruling on a demurrer the plain meaning of an attached contract controls

unless (1) the plaintiff alleges the existence of specified parol evidence contrary to that

meaning and (2) the contract is reasonably susceptible of the plaintiffs claimed

interpretation. (Id. at pp. 1122, 1127-28.) In the present case, the trial court was entitled

to credit the plain meaning of the recording contracts and the 1989 Assignment because

Stewart failed to allege any specified parol evidence giving the documents a reasonable

alternative meaning.

Stewart contends that reissued, remastered, remixed or sampled recordings are

not prior recordings within the meaning of the 1989 Assignment. This argument fails

because it mischaracterizes the phrase prior recordings as used in the 1989 Assignment.

The document assigns all rights resulting from the prior exploitation of his services as a

recording artist, which includes all his rights under the 1967 and 1972 recording

contracts. Stewarts argument that he assigned only his rights with respect to pre-1989


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uses of the master recordings and not his rights with respect to future uses, relies on a

faulty premise. Master recordings are not sold to the public. In the words of the 1967

Stewart-Sony contract, their value derives from the right to use them to manufacture by

any method now or hereafter known phonograph records and other reproductions thatare sold to the public. Reissued, remastered, remixed and sampled recordings are such

reproductions that Sony has the right, as owner of the master recordings, to create from

time to time.6 Stewarts royalty rights in such newly created products are rights resulting

from the prior exploitation of his skills talents and services . . . as a . . . recording artist

within the plain meaning of the 1989 Assignment.

Stewart also alleges that because the 1989 Assignment does not include the word

irrevocable he retained the right to revoke it. We disagree, since an unlimited

assignment normally transfers title. In any event, the issue is moot because his pleadings

established he did not purport to revoke the 1989 Assignment until filing his January

2010 complaint, by which time Sony had stopped paying Even Street.

Finally, we note that Stewarts conclusory allegations that his managers and Even

Street lacked his authority and he was unaware of their actions are trumped by his

pleadings factual allegations (Iverson, Yoakum, Papiano & Hatch v. Berwald(1999) 76

Cal.App.4th 990, 995.) and exhibits (BanisRestaurant Design, Inc. v. Serrano, supra,

134 Cal.App.4th at pp. 1044-45.) Stewart alleged he has always [employed] managers

and advisers to handle his personal and financial affairs. In 1989, he retained Goldstein,

Topley and attorney Stone, through Even Street, to provide financial advice . . . and to

act on [his] behalf . . . ; [and to] manage and take care of all his personal and professional

financial affairs . . . . Once they became his managers, he relied on them to deal with

the royalty distribution companies. He also gave Even Street and his managers his all-

6

Thus, the 2002 Sony Agreement defines Masters as the master recordingscreated under the Agreements, which, in turn, is defined to include the June 7, 1967and September 15, 1972 recording Contracts. The 2002 Agreement also defines theBest of Album, Box Set, Essentials Album and the Remix Album asreproductions of the Masters , and the Samples are excerpts of Masters.


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encompassing, irrevocable and virtually unlimited power of attorney . . . to act on his

behalf. He confirmed that power by attaching the 1989 Employment Agreement to his

pleadings. And, despite the Employment Agreements stated five year term, Stewart and

the Goldstein Group continued to operate under it for 20 years until Stewart terminated itin 2009. Thus, Even Street and the Goldstein Group had authority to deal with the

royalty companies as Stewarts agents. Further, Stewart is deemed to have knowledge

of the conduct of his managers when they act on his behalf, notwithstanding allegations

they withheld information from him. (Civ. Code 2332; ORiordan v.Federal Kemper

Life Assurance Co. (2005) 36 Cal.4th 281, 288 (ORiordan); Columbia Pictures

Corporation v.DeToth (1948) 87 Cal.App.2d 620, 630.) Accordingly, we properly

disregard Stewarts conclusory allegations that Even Street and his managers lacked

authority to act on his behalf and that he was unaware of their actions.

We conclude the trial court properly rejected Stewarts standing arguments based

on the plain meaning of the 1989 Assignment and Stewarts own allegations. Because

Stewart assigned to Even Street any and all royalty and other rights derived from Sonys

master recordings, Stewart lacks standing to sue Sony over those rights. Once rights are

assigned, the assignee stands in the shoes of the assignor, and the assignor lacks

standing to sue on the claim. (See Civ. Code 1458;Johnson, supra, 111 Cal.App.4th

at p. 1096.)7

3. Stewart lacks standing to sue Warner

Stewart sued Warner for conversion, accounting and declaratory relief. The

claims are grounded on the allegation that Warner wrongfully paid Stewarts royalties to

7 Stewarts conversion and negligence claims against Sony are also premised on thecontention that the 1989 Assignment did not encompass all of Stewarts rights as to Sonyroyalties. Since we have concluded that premise is faulty, those claims would fail on themerits even if Stewart had standing to sue. The derivative claims for accounting anddeclaratory relief would properly be dismissed along with the underlying substantiveclaims.


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Even Street. As noted above, the 1989 Assignment included the Warner royalties. The

fourth amended complaint specifically alleges that Warner received the 1989 Assignment

and complied with it in distributing the royalties to Even Street.

The trial court ruled on the Warner demurrer in the same breath as its Sony ruling,concluding that the facially valid 1989 Assignment was properly relied on by Warner,

which had no notice of any contention it was invalid, or that Stewart objected to the way

the royalties were being paid. Again, we agree with the trial courts conclusion.

For the reasons discussed above as to defendant Sony, we conclude Stewart has no

standing to bring suit against Warner. The 1989 Assignment divested Stewart of his

individual right to the Warner royalties, and of any right to sue for them. (Johnson, supra,

111 Cal.App.4th at p. 1096.)

4. Assuming standing, Stewarts claims against Warner were properly dismissed

Warner contends the 1989 Assignment negates the wrongful act element of the

tort of conversion. We agree.

The elements of conversion are: (1) plaintiffs ownership or right to possession of

the property; (2) defendants conversion by a wrongful act or disposition of property

rights; and (3) damages. (Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066

(Burlesci); seeMcKell, supra, 142 Cal.App.4th at p. 1491 [conversion requires

defendants wrongful act toward or disposition of the property, interfering with

plaintiffs possession . . .]; Gardena Valley Airport, Inc. v. AllAmerican Sports

Enterprises, Inc. (1964) 230 Cal.App.2d 478, 481-482 [affirming dismissal of conversion

claim where there was no wrongful conversion of the subject property].) Moreover,

[t]he law is well settled that there can be no conversion where an owner either expressly

or impliedly assents to or ratifies the taking, use or disposition of his property.

(Farrington v. A. Teichert & Son, Inc. (1943) 59 Cal.App.2d 468, 474; see alsoReno v.

A.L. Boyden Co. (1931) 115 Cal.App. 697, 701 [[Defendant] Fassel having sold with

plaintiffs consent, there could be no conversion. . . .].)


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As the trial court correctly pointed out, the royalty companies were simply doing

what they were instructed to do for years upon years. Warner did not act wrongfully in

this matter. It paid and accounted for royalties exactly as instructed by Stewart in a

signed, notarized writing. As noted above, the complaint acknowledges Warner receivedand relied on the 1989 Assignment. The document, which we quoted in full above,

clearly and unambiguously transfers the Warner royalty rights to Even Street, and Warner

was never given notice of any dispute as to its validity. Indeed, as noted above, Stewarts

own pleadings establish that the Goldstein Group acted as his agents in dealing with the

royalty companies. Thus, even assuming Stewart has standing to sue Warner, the trial

court correctly sustained the demurrer as to the conversion cause of action, as well as the

derivative actions seeking accounting and declaratory relief.8

B. Roberts Separate Claims

Plaintiff Roberts sued BMI for conversion, breach of written agreement and

declaratory relief, Roberts alleges he was entitled to over $3,000,000 of BMI royalties

which were paid to Goldstein-Majoken and former defendant Bank from 1996 to 2009.

The trial court, immediately after finding Stewart had no standing to sue the

royalty companies, stated: As to Mr. Roberts, he is in a slightly different situation, but I

also think the whole argument, really, rises and falls on this [sic] sending royalties to

Majoken. Inc. The court then noted BMI was in literal compliance with its obligation to

pay Majoken, Inc., although unaware that a second Majoken entity existed at the address

to which the royalties were being mailed. The court noted Roberts never contacted BMI

with any concerns before 2010. The court stated, It seems to the court that there is just

not a breach of contract claim there as to Mr. Roberts versus BMI. The court also

8 Having affirmed the trial courts ruling as to Stewart v. Warneron two differentgrounds, we need not reach the other issues debated by the parties, including the statuteof limitations, whether the royalty obligation constituted a bailment, and whetherplaintiffs alleged a sufficiently identifiable sum to satisfy the property element of thetort of conversion.


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questioned whether, under New York law, Roberts had succeeded to the assets of

Roberts-Majoken when it dissolved. The court added, So I think Mr. Roberts also has a

standing problem up until the time he sends out the notice to change where these things

are directed to. I think the royalty companies . . . shouldnt be here. They were doingwhat they were told to do either by Sylvester Stewart or Mr. Roberts or their agents.

1. Roberts has standing to sue BMI

We disagree with the trial courts conclusion that Roberts lacks standing to sue

BMI.There is no dispute that, in 1976, Stewart unconditionally, irrevocably and

absolutely assigned all his BMI royalty rights to Roberts and/or Ken Roberts

Enterprises . . . and/or his . . . designee, as you may hereafter be directed in writing by

Ken Roberts. BMI contends that Roberts lost those rights in the 1979 Modification.

The latter document substituted Roberts-Majoken for Ken Roberts Enterprises as

Roberts designated recipient of the royalty payments. We disagree with BMIs

argument that the 1979 Modification was an assignment to Roberts-Majoken. The 1979

Modification on its face is not an assignment and does not transfer Roberts individual

rights in the BMI royalties. Rather, under the 1979 Modification, Roberts merely

exercised his right to direct payment of the BMI royalties to Roberts-Majoken, as

successor in interest to Ken Roberts Enterprises.

BMI cites to New York Business Corporations Code sections 1006 and 1111 in

support of its contention that Roberts does not have standing to bring an action against

BMI. Those sections state that the assets do not automatically transfer to the directors of

a defunct corporation. However, Roberts was not only Roberts-Majokens sole director,

he was its only shareholder and officer. When a corporation dissolves, the rights of that

corporation transfer to the shareholders upon dissolution of that corporation. (Gilbert v.

Indiana, 2011 U.S. Dist. LEXIS 16675 *8 (S.D.N.Y. Feb. 16, 2011); see also Wells v.


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Ronning (N.Y. App. Div. 2000) 269 A.D.2d 690, 692 [applying New York Law to

determine that upon dissolution of the corporation, after the payment of or provision for

all liabilities, the remaining assets may be distributed to the shareholders, citing N.Y.

Business Corporations Law, 1005].) In Gilbert, the plaintiff had assigned certain rightsto his wholly owned corporation, which was later dissolved. The court found the result

of the dissolution was reversion of the assigned rights to its sole shareholder, the plaintiff.

(Gilbert v. Indiana, supra, at pp. *8-9.)

We also disagree with BMIs contention that, because earlier versions of the

complaint acknowledged a side agreement between the plaintiffs that the assigned

royalties would not exceed the amount of Roberts loans to Stewart, and further

acknowledged that the loans have been repaid, Roberts has no basis for asserting

damages. BMI correctly notes that a plaintiff may not resurrect a cause of action by the

unexplained omission of facts which made a previous complaint defective. (Vallejo

Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946.) Here,

however, mere allegations in all versions of the complaint are trumped by relevant

documents attached to it. As noted above, the 1976 Assignment from Stewart to Roberts

was unconditional, irrevocable and absolute. If liability is established, damages, if any,

will flow to Roberts. The issue of whether Roberts actually suffered monetary harm is a

factual dispute best resolved at trial.

Because Roberts at all times retained his individual rights to the BMI royalties, the

trial court erred in concluding Roberts has no standing to sue BMI. We turn to the merits

of Roberts causes of action, which the trial court did not fully address after ruling that

Roberts lacked standing to sue BMI.

2. Roberts sufficiently pled breach of contract and declaratory relief claims against

BMI, as limited by the statute of limitations

The essential elements of a breach of contract claim are (1) the contract, (2)

plaintiffs performance or excuse for nonperformance, (3) defendants breach and (4)


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resulting damages to Plaintiff. (Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co.

(2004) 116 Cal.App.4th 1375, 1391, fn 6 (Armstrong).) The trial court found Roberts

complaint against BMI lacked a sufficient claim of breach because it acknowledged BMI

at all times paid an entity called Majoken Inc. as it had been directed to do in the 1979Modification document signed by both Roberts and Stewart. However, that is neither the

beginning nor the end of the story. The 1976 Assignment notified BMI that Roberts, and

only Roberts, had unconditional control of the BMI royalties, including the right to

designate a new recipient entity by written notice. BMI received such written notice

from Roberts (and Stewart) when it received and signed off on the 1979 Modification.

However, when Stewarts manager, attorney Stone, notified BMI of a change of address

for Majoken Inc. in 1996, BMI had a contractual duty to insist on written instructions

from Roberts. Its alleged failure to do so was properly pled as a breach of contract

because the direct consequence was payment of the royalties to Goldstein-Majoken rather

than Roberts-Majoken. The trial court erred in concluding otherwise.

We also reject BMIs contention that no contract existed between BMI and

Roberts. As the unconditional assignee of Stewarts rights, Roberts was owed the same

contractual duty which BMI owed Stewart under their original agreement. BMI had

notice of the assignment by virtue of its participation in the 1976 Assignment and the

1979 Modification. (Johnson, supra, 111 Cal.App.4th at p. 1096.)

BMI contends that Roberts breach of contract cause of action is barred by the

applicable four-year statute of limitations. (See Code Civ. Proc. 337.) BMI asserts the

alleged breach occurred nearly two decades ago, when BMI complied with the notice of

change of address that it received from attorney Stone, Stewarts then-manager and

attorney. BMI asserts that any claim accrued at that time and is long since time-barred,

relying primarily onArmstrong, supra, 116 Cal.App.4th 1375, along with federal District

Court authority. We disagree.9 As noted inArmstrong, The context of continuing - that

is, periodic - accrual for periodic breach is to be distinguished from that of a single

9We have reviewed the cited federal cases and find them distinguishable.


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breach or other wrong which has continuing impact. (Armstrong, supra, at p. 1389; see

alsoAryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1197-1198

(Aryeh).) Armstrong involved breach of an obligation to make monthly payments based

on oil and gas production revenue. The court found that each monthly obligation wasseverable for statute of limitations purposes. (Id. at pp. 1388-1396.) Here, the essence of

the breach was repeated each time BMI sent a royalty check to an address not authorized

by Roberts. We find BMIs periodic payment duties severable, as were the duties in

Armstrong. (Aryeh, supra, 55 Cal.4th at pp. 1198-1201 [monthly Unfair Competition

Law violations in context of copier rental contract]; Wells Fargo Bank v. Bank of

America (1995) 32 Cal.App.4th424, 439, fn. 7 [monthly rental agreement]; White v.

Moriarty (1993) 15 Cal.App.4th 1290, 1299 [promissory note]; Conway v. Bughouse,

Inc. (1980) 105 Cal.App.3d 194, 200 [buy-sell agreement with monthly payments for

life].)

We note that any other result would be impractical, since no ascertainable

damages would have existed based only on BMIs acceptance of the change of address

notice. BMIs position would also be extremely unfair to Roberts, assuming he can make

good on his allegation that he was completely unaware of the change of address notice

and the payment of royalties to another entity until 2009. Accordingly, Roberts breach

of contract cause of action is not time-barred, but, as he concedes, he may only seek to

recover payments dating back four years from the filing of the action against BMI. (Code

Civ. Proc. 337.)

As for declaratory relief,it derives its force from the affirmative claim for breach

of contract, and properly remains in the case. Subject to the four-year statute of

limitations, Roberts is entitled to a determination of his rights under the BMI-Stewart

Affiliation Agreement, the 1976 Assignment and the 1979 Modification.

3. The trial court properly sustained BMIs demurrer to Roberts conversion claim

As noted above, the elements of conversion are: (1) plaintiffs ownership or right

to possession of the property; (2) defendants conversion by a wrongful act or disposition

of property rights; and (3) damages. (Burlesci, supra, 68 Cal.App.4th at p. 1066; see


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McKell, supra, 142 Cal.App.4th at p. 1491 [conversion requires defendants wrongful

act toward or disposition of the property, interfering with plaintiffs possession . . .].) In

the present case, in addition to finding Roberts had no standing, the trial court expressed

doubt that royalty payments can be the subject of conversion. The trial court alsoimpliedly found no wrongful act, given BMIs undisputed good faith reliance on the

notice of address change for Majoken, Inc. The parties brief these and several other

issues related to the conversion claim, including the statute of limitations. We need not

reach all of them, because the following are each dispositive.

First, Roberts has no ownership interest in Stewarts BMI royalties which could be

converted, despite the 1976 Assignment. Under the terms of the BMI Affiliation

Agreement, neither Stewart nor his assignee owns the monies BMI collects from the

licensing of Stewarts performance rights. As expressly provided in the BMI Affiliation

Agreement, You [Stewart] acknowledge that the rights obtained by you pursuant to this

agreement constitute rights to payment of money and that during the period we shall hold

absolute title to the performing rights granted to us hereunder. As a BMI affiliate,

Stewart retained, and later assigned to Roberts, only a contractual right to such payments,

the breach of which does not support a conversion claim. (See Farmers Ins. Exchange v.

Zerin (1997) 53 Cal.App.4th 445, 452 [ . . . a mere contractual right of payment, without

more, will not suffice to plead conversion]; see also Cusano v. Klein (C.D. Cal. 2003)

280 F.Supp.2d 1035, 1043 [summary judgment upheld on conversion claim predicated on

breach of royalty agreement]; see alsoRodgers v.Roulette Records, Inc. (S.D.N.Y. 1988)

677 F.Supp. 731, 736-737 [Defendants never held property belonging to plaintiff since

they only held the proceeds of sales of their own property, the recordings, a part of which

they were contractually obligated to pass onto plaintiff in the form of royalties. [. . . ]

When royalties are due pursuant to a contractual relationship, whether express or implied,

a plaintiff cannot recover on a theory of conversion without establishing more.

(Citations omitted)].)

Second, a breach of contract becomes tortious only when it also violates a duty

independent of the contract arising from the principles of tort law. (Erlich v. Menezes


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(1999) 21 Cal.4th 543, 551(Erlich); see alsoApplied Equipment Corp. v. Litton Saudi

Arabia Ltd. (1994) 7 Cal.4th 503, 516.) Absent such an independent violation, the

wrongful act element of the tort of conversion is missing. (Erlich, supra, at p. 551.)

Despite Roberts claim that BMI was a bailee and a fiduciary, we agree with BMIscontention that no such independent violation is adequately alleged in the present case.

Roberts attempt to characterize the agreement between BMI and Stewart as a

bailment is not persuasive. A bailment (calleddepositin the Civil Code) is the deposit

of personal property with another, usually for a particular purpose, under an express or

implied contract. (13 Witkin, Summary of California Law (10th ed. 2005) Personal

Property, 156, p. 168.) Bailments generally involve the storage of personal property for

hire, as with warehouses, parking lots and banks. None of the cases cited by Roberts

stands for the proposition that a licensing agreement creates a bailment, and most of the

cases involve items of tangible rather than intangible property. (See e.g.Byer v.

Canadian Bank of Commerce (1937) 8 Cal.2d 297, 298 [bonds]; Gebert v. Yank(1985)

172 Cal.App.3d 544, 547 [two thoroughbred horses].)

The cases cited by Roberts involving the alleged conversion of money are

factually inapposite. InMcKell v.Washington Mutual, Inc., supra, 142 Cal.App.4th at p.

1490, plaintiff was held to have failedto plead breach of a bailment agreement and

conversion where italleged that a bank had wrongfully overcharged and refused to

refund fees paid forunderwriting, tax services and wire transfer services. In explaining

its ruling, theMcKell court noted that plaintiff had failed to cite anyauthority to support

the proposition that a cause of action for conversion can be basedon overcharges. (Ibid.)

Powell v. Bank of America Natl Trust & Sav. Asso. (1942) 53 Cal.App.2d458, 463 is

also distinguishable. In Powell, an owner of sacks of barley depositedthem in a

warehouse, receiving receipts which he delivered to a bankwith the instructions as to

disbursement of the funds. In violation of those instructions, the bank sold the property

and used the proceeds tosatisfy its own judgment against the owner. Notably, Powell

involves facts that are notpresent here: a corpus of property delivered and entrusted to a

bank, the sale of thatproperty by the bank, and the banks self-dealing in using the sale


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proceeds to satisfy itsown judgment against the owner in violation of the instructions of

the owner. In addition, the present case involves no allegation of money held in trust or

reserve accounts as occurred inMcKell, supra, 142 Cal.App.4th at p. 1490 andClifford v.

Concord MusicGroup, Inc. (N.D. Cal. 2012, No. C-11-2519 EMC) 2012 U.S. Dist.LEXIS 14084.

Further, in the Fourth Amended Complaint Roberts has not alleged a bailment and

he may not turn a licensing agreement into a bailment by saying so in a brief. A license

is a mere waiver of the right to sue the licensee for infringement. (DeForest Radio

Telephone Co. v. United States (1927) 273 U.S. 236, 242.) Roberts has not shown

authority that a licensing agreement can be the subject of a bailment. Further, he has not

and cannot allege a breach of bailment by BMI. There is no accusation here that BMI

did anything improper with its contractual licensing authority, as opposed to the royalties

derived from that authority.

Roberts contends BMI breached a fiduciary relationship which was established by

the provision in the BMI Affiliation Agreement granting BMI a power of attorney to

enforce Stewarts royalty rights. Again, we are not persuaded. The power of attorney

provision was limited in scope to enforcing and protecting the very rights granted to BMI

in the contract. It created no additional duty on the part of BMI that can be characterized

as fiduciary. (See Wolf v. Superior Court(2003) 107 Cal.App.4th 25, 27; Cusano v.

Klein, supra, 280 F.Supp.2d at pp. 1040-1041 [limited power of attorney in royalty

contract does not establish fiduciary relationship for all purposes]; compare Tran v.

Farmers Group, Inc. (2002) 104 Cal.App.4th 1202, 1206 [limited fiduciary duty created

by power of attorney in insurance context].)

Thus, had the trial court reached the merits of Roberts conversion claim against

BMI, it would have been obligated to sustain the demurrer.


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VI. DISPOSITION

The trial court shall vacate its order sustaining defendant Broadcast Music, Inc.s

demurrer to plaintiff Ken Roberts causes of action for breach of contract and declaratoryrelief. In all other respects the rulings and orders of the trial court are affirmed.

Defendants Sony, BMI and Warner shall recover their costs on appeal from plaintiff

Sylvester Stewart. No costs are awarded as between defendants and plaintiff Roberts,

and as between former defendant First California Bank and plaintiffs.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ONEILL, J.*

We concur:

TURNER, P.J.

ARMSTRONG, J.

* Judge of the Ventura County Superior Court, assigned by the Chief Justicepursuant to article VI, section 6 of the California Constitution.

Sly Stone Court Ruling

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